Exploding the 'Care Costs' myths...

Care costs are a very emotive subject for those that have either been affect by, or even seen their parent's generation affected by the spiraling costs of care and having to sell their home to cover those costs.  Most people view their home as their principal asset, and method of leaving an inheritance to the next generation.  There was some hope for those so affected with the introduction of a cap to these fees, but the circumstances around that cap can be a little misleading to say the least.  Here I look to explode a few of the myths about the cost of care under the current structure...

Under the new rules I won't have to sell my home

MYTH The Government has made much fanfare of the fact that its new rules won't compel people to sell their homes when they go into care. Most have interpreted this to mean that they won't have to sell their homes at all, and will be able to leave it to their children. Unfortunately, this is not the case as all the new rules do is alter the timing of such a sale. Rather than be forced to sell it upfront when you go into care, the local authority will put a charge on your home, which will be recouped from your estate after your death.

The maximum I will spend on care will be £70,000.

MYTH It is expected that the cap will be set at this amount. However, this does not mean that this is the maximum that you will have to pay for care.

Despite common conception, the costs of accommodation and food (the 'hotel bill') are not included in the cap.  The 'cap' will also exclude some personal care costs, such as hairdressing costs, help with dressing etc.

If you need nursing care, the local authority will make an assessment of what it will pay towards this cost. If you cannot find a nursing home to deliver this care at this price, or you cannot find one you like within this budget, you or your family will have to 'top up' the difference. These additional payments are not covered by the care cap.

I will be able to leave a bigger inheritance under the new rules

PART MYTH This is not necessarily the case. The cap will help a small proportion of people who have substantial medical needs and spend years in care. But the average nursing home resident, who spends a little more than two years in care, will not really benefit from the change.

In addition, while it is possible for the local authority to put a charge on your home now, under the new rules it will also charge interest on what will effectively be an equity release scheme. Rather than just paying for the care fees from the sale of the home, people face paying care fees plus interest.

I own my home. There is nothing I can do to help cover care costs

MYTH If a family member needs care, it is a good idea to seek specialist legal help. A qualified adviser should be able to explain the different options available. This can deal with arranging one's affairs in such a way as to shelter assets, or to make better use of those assets to prevent their capital value from being eroded (i.e. by paying care costs out of income).  There are many solutions to this problem, beyond just selling the family home and spending the capital in care costs.